Database giant Oracle recently announced its first cloud region in Malaysia (Image: Oracle)
Malaysia secured MYR 141.7 billion ($31.6 billion) in digital infrastructure investments in the first 10 months of 2024 to solidify its standing as Southeast Asia’s top data centre hub, according to Knight Frank.
The result more than tripled the MYR 46.2 billion in approved investments for the entirety of 2023, the consultancy said Monday in a release. This year’s growth was led by $23.3 billion in investment from tech giants including Microsoft, Amazon Web Services, Google and Oracle.
Malaysia recorded an annual take-up of 429 megawatts of capacity, well ahead of regional rivals Indonesia (93MW), Thailand (31MW), Vietnam (3MW) and the Philippines (1MW), Knight Frank said in a research report. Demand was focused on the data centre hotbed of Johor, near Singapore, while take-up also improved in the Klang Valley surrounding the capital region.
“Malaysia’s strategic efforts in digital infrastructure are not just a blueprint for the region but a call for global players to seize this unparalleled opportunity,” said Knight Frank Malaysia managing director Keith Ooi. “The country’s commitment to technological innovation and sustainability makes it a preferred destination for data centre investments and a model for economic resilience.”
Incentives Attract
Knight Frank highlighted the Malaysian government’s “proactive measures” to attract data centre investment, including the Green Lane Pathway, which fast-tracks electricity supply for projects, and the Corporate Renewable Energy Supply Scheme, which lets big companies buy renewable energy directly from independent power producers.
Knight Frank Malaysia managing director Keith Ooi
“By significantly reducing timelines for electricity supply and promoting renewable energy adoption, these initiatives have not only enhanced Malaysia’s infrastructure readiness but also underscored the country’s commitment to sustainability and technological advancement,” the consultancy said.
NVIDIA kicked off the rush last December when the US chip giant announced plans to build AI capabilities into a data centre in Johor’s Iskandar region and bring supercomputing infrastructure to the country. Five months later, tech goliaths Microsoft and Google each pledged more than $2 billion in Malaysia investments.
Microsoft followed up in June with the $85 million acquisition of a data centre development site in Johor’s Kulai district, and Google has begun building multiple facilities in Selangor state northwest of Kuala Lumpur under a collaboration with Sime Darby Property.
Citing sources including data provider DC Byte, news announcements and in-house research, Knight Frank said other players unveiling large Malaysia commitments this year included TikTok maker ByteDance, Amazon Web Services and most recently database titan Oracle, which plans to invest more than $6.5 billion to set up its first public cloud region in the country.
“The exponential growth in Johor, particularly in areas like Kulai and Iskandar Puteri, is attracting major international operators and creating significant opportunities for land acquisitions and partnerships,” said Justin Chee, executive director of valuation and advisory at Knight Frank Malaysia. “Meanwhile, Klang Valley continues to evolve, with a strong pipeline of large-scale data centres such as those planned by Google and AWS.”
Demand on Resources
The surge of data centre investments in Malaysia, especially in Johor over the past two years, has raised concerns over increased demand for electricity and water resources, Knight Frank said. Similar pressures led neighbouring Singapore to impose a moratorium on new builds in 2019 and limit capacity for future projects when the suspension was lifted in 2022.
Malaysia’s national government has launched an incentive system based on a scorecard approach to foster balanced and responsible growth, while Johor authorities have set guidelines for considering factors like the adoption of renewable energy, water management, resource readiness and economic benefits.
As a result, Johor has rejected nearly 30 percent of data centre applications since June, state officials told the Straits Times.
“As our data centre industry transitions into a stabilisation phase, the focus on sustainability, energy efficiency, and innovation will define its future trajectory,” Knight Frank’s Chee said.
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